WHAT WILL FINANCIAL TEA LEAVES TELL US ABOUT THE 2010 CONGRESSIONAL ELECTIONS?

(Links to tables for 2003-2009 at the bottom. This text was written before the 12 month data was available, the tables have since been updated with the 12 month data)

Congressional candidates are required to file their 2009 year-end financial reports with the Federal Election Commission by January 31. Within days, we can expect articles speculating whether the fundraising numbers tell us how the parties will do in the coming election. To help put some perspective on the speculation, the Campaign Finance Institute (CFI) is releasing equivalent nine-month and year-end summary figures for past the four election cycles.

These tables can seem long and intimidating. The FEC filings are even more so. Here are a few ideas we offer to anyone who would like suggestions about what to look for.

Incumbents

The numbers will show the incumbents to be way out ahead of the challengers in the financial horse race. Do not be fooled by this. Incumbents can raise money. The average House incumbent raised more than $1.4 million dollars during the 2008 cycle – more than $1.1 million from PACs and thousand-dollar-plus donors alone. Incumbents in close races raised even more. Because losing incumbents almost always raise and spend more than the challengers who beat them, it is a waste of effort at this stage to pay much attention to the incumbents' war chests. The only exception is if an incumbent's numbers are low. That may be a signal that the incumbent is asleep at the switch – or thinking about calling it quits.

Challengers

If you want to know about incumbent-challenger races, the best financial numbers to watch are the challengers'. But even here, the most obvious summary numbers may not be the best.

Table 1 shows the average receipts for incumbents, challengers and open seat candidates, by party. The columns show nine-month numbers for 2003-2009 and twelve-month ones for 2003-2007. In 2008, Democrats made a net gain of 21 seats in the House. But at the end of 2007, the summary numbers forall Democratic and Republican challengers' look about even (Table 1). However, if we look at Table 2(House incumbents versus Best-Funded Challengers) we see that the best-funded Democratic challengers in each district ended the year with an average of about $40,000 more cash in hand than their Republican counterparts. More importantly, a higher percentage of Republican incumbents were facing significant challenges than were their Democratic counterparts. This was also true at this point in the 2006 cycle (when the Democrats gained 31 seats) but not 2004 (when the Republicans made a net gain of three).

What about this year? In 2009, nearly half of the Democratic incumbents were facing challengers who had already reported to the FEC after nine months. This strong showing of early interest by GOP challengers is well above the percentage for either party in the past three elections. Interestingly, it was showing up even before public opinion polls began to show a downturn for the Democrats in the autumn months. If the year-end 2009 reports continue to show the Republicans recruiting an unusually high number of potentially strong challengers, that would mean a busy election year for Democratic incumbents.

Open Seats

Forecasters will also want to be tracking the open seats (see Table 3). These are races in which, by definition, no incumbent seeks re-election, incumbency advantage cannot play a role, and the opposition party should therefore stand a better chance. In fact, the number of Republican retirements in 2006 and 2008 helped signal the coming Democratic gains in those years. In the 2004 cycle, the parties' departures were more evenly balanced.

Some commentary has been suggesting that recent Democratic retirements point to a tough election ahead for their party. But over the full twelve months of 2009, there in fact has been a relatively even partisan balance among the departures. On the surface, this looks more like 2004 than 2006 or 2008. If anything, it was looking (counter-intuitively) after nine months as if there were fewer Republicans running for Democratic-held open seats than Democrats running for Republican-held seats. These numbers should show some change after the January 31 reports. If they do not, it would mean that GOP recruiters still have some work to do if they are going to capitalize on the election.

Senate

Because many fewer Senate than House seats are up for election in any given year, the summary statistics for Senate candidates (Table 4) are less useful for prediction. The best summary numbers to track for Senate elections may simply be the number of incumbent-challenger races in each party with strong challengers, and the partisan balance of the candidates who are putting their hats in the ring for the open seats.

What Next?

Once the candidates have filed their data with the FEC, CFI will update these tables. Because Senate is still the only part of the federal government that has exempted itself from electronic disclosure, CFI's updates will take longer for the Senate than House.

List of Tables:(These tables have been updated since first release to reflect full 12 month totals)